As is sometimes the case on the day following a Fed day, the bond market carried a bit more momentum in the same direction as yesterday afternoon. Fortunately, the momentum was toward lower rates this time around–a nice break from the past two Fed days which resulted in several days (and weeks) of higher rates. This leaves the average lender roughly in the middle of the range over the past 3 months. These are also the lowest levels seen since last Thursday for the average lender.

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Bonds are adding moderate to yesterday’s post-Fed gains. Most of today’s rally has followed this morning’s jobless claims data, but we wouldn’t necessarily give it all the credit. This is a tricky week to try to make sense of jobless claims due to the very late Thanksgiving holiday this year. It threw a wrench in seasonal calculations. In a nutshell, last week’s initial claims plummeted due to Thanksgiving and seasonal adjustments didn’t help much because, on average, Thanksgiving falls on the 25th (thus, last week’s claims were too late in the month to get much benefit from the adjustment).  Continued claims magnify the same issue with this week’s data (continued claims run 1 week behind initial claims). This is why we have the biggest jump in years in both metrics with one being higher and the other being lower. It’s all about seasonal adjustments.  If we do our best to look through that, non-adjusted continued claims are the highest in years, and bonds could be paying some attention to that.
This seasonally adjusted chart shows the snap back to reality for initial claims.  It would have been a smaller jump if last week wasn’t distorted on the low side. 

Opposite problem for continued claims, which are reported 1 week later (i.e. you can bank on a big snap back next week):

The following chart shows NON-seasonally adjusted continued claims.  With this chart, it’s easy to see 2025 running at the highest levels in years. Bonus point for those who see the gray line poking briefly higher only to realize Thanksgiving was on the 11/23 in 2023.

With the Federal Reserve decision largely factored in, Jerome Powell’s comments on future outlook is more likely to influence the housing market.

Hartford, Connecticut, Rochester, New York, and Worcester, Massachusetts, headed the list of the 100 largest metro areas in the country, according to Realtor.com.

Home equity is becoming a data-driven asset that demands sharper valuation and analytics as lending options expand, according to Clear Capital’s EVP of Strategy and Growth.

November rate locks fell seasonally but hit their strongest level since 2021, led by refis, while lenders shifted more loans to the GSE cash window.

Sen. Hassan sent letters to corporate owners of manufactured housing communities, looking for answers on affordability and living conditions for their residents.

Powell Avoided Throwing Cold Water on Rate Outlook. Bonds Approved

Today’s gains ended up being all about Powell’s press conference. While there were a few potentially friendly comments (current rates in high end of neutral range, recent job gains overstated, no decision yet on January, inflation coming down), we can also consider that Powell simply avoided the same sort of hawkish reminders seen in the last press conference.  On a day where bonds had already been selling fairly aggressively for 2 weeks, this could be all the market needed to breathe a sigh of relief and reinforce the ceiling of the prevailing trading range. All in all a fairly tame Fed day reaction, but one with a happy ending nonetheless. 

Econ Data / Events

Employment costs Q3

0.8% vs 0.9% f’cast, 0.9% prev

Market Movement Recap

08:46 AM Slightly weaker overnight and little-changed so far. 10yr up 1.1bps at 4.197. MBS up 2 ticks (.06).

11:29 AM Best levels of the day. MBS up 7 ticks (.22) and 10yr down 2.4bps at 4.162

02:40 PM No major volatility since Fed announcement.  Slightly weaker as Powell begins speaking.  MBS still up a quarter point. 10yr down 1.3bps at 4.176

03:09 PM MBS up 3/8ths and 10yr down 4.1bps at 4.145.

The Fed cut its policy rate by 0.25% today and mortgage rates moved lower after the announcement. That said, those two developments are not related. In fact, there was no movement in the bonds that underlie mortgage rates when the rate cut was announced. Instead, the market (and rates) moved in response to Fed Chair Powell’s press conference. While there is a mistaken belief that such press conferences “always” result in upward pressure on rates, today shows they can go both ways. Key comments that may have helped: Powell: Job gains could have been overstated in recent months Powell: Growing evidence that inflation is coming down Powell: Rates are now in a high range of neutral The reference to “neutral” means the Fed Funds Rate is near the levels that should neither help nor hurt the economy. Being in the higher end of that range means there could be room for another rate cut or two in 2026. This possibility was already reflected in the rate forecasts that came out with today’s announcement, but the market appreciated hearing it from Powell. Up until Powell’s press conference, mortgage rates had been little changed from yesterday. Afterward, most lenders made mid-day changes resulting in the lowest rates of the week.